Observations and Recommendations

4.K Other Significant Matters

During the course of the audit several important issues were identified that were not specifically related to the stages in the management of the project cycle. These other significant matters for attention are as follows:

4.K.1
The CBCIP does not have a formal Communications Plan.

Clause 10.1 and Schedule "C" to the CBCIP Agreement requires that Canada and British Columbia develop and deliver a "...Communication Plan for the term of this Agreement which will enhance opportunities for appropriate, continuous and consistent recognition for co-operative activities under this Agreement".

It is now more than two years since the Agreement was signed on October 10, 2000 and no formal, approved Communication Plan is in place. A draft Plan had been prepared by MCSE but has not to date been submitted to the Management Committee for approval.

According to MCSE, resources were concentrated on implementing the processes for project approvals and not dedicated to administrative details.

This is considered significant since the Communication Plan deals with how approved projects are to be announced, how costs will be shared, and so on. Without an approved Communications Plan, these activities have been developed and delivered without the oversight or approval of Management Committee.

News Release and Backgrounders are prepared when projects are ready to be announced. We noted that this information is not found on the provincial project files but is contained in the federal files at WD.

CBCIP signs indicating joint federal and provincial funding are being sent to recipients but the process for this is not transparent. There is no record in the provincial project files that the required signs have been ordered or delivered to recipients.

The Communication Plan should be finalized and approved by Management Committee as soon as possible.

4.K.2
The CBCIP does not have a formal Audit Plan.

Clause 8.5 of the CBCIP Agreement states that the expenditures incurred under the Agreement are audited annually in accordance with the Audit Frameworks in Schedule B to the Agreement. Clause B.3.1 of Schedule B to the Agreement requires that Management Committee establish an annual audit plan.

The first annual audit plan was prepared in 2002. This plan is in draft form and, has not been approved by Management Committee, or submitted to the Ministers.

Recipients under the CBCIP could be subject to audit or site visits from numerous interested organizations, such as:

Office of the Auditor General of Canada (OAG)

OAG Environmental Commissioner

Office of the Auditor General of British Columbia

Provincial government Internal Audit

Federal government (WD) Internal Audit

CBCIP Environmental Assessment site visits

CBCIP engineering site visits

CBCIP program officer site visits

CBCIP financial audits of claims

Per Clause B.4.1(a) of Schedule B to the Agreement, the CBCIP audit plan should be collaborative to reduce the intrusiveness of numerous audits and site visits to recipients.

The CBCIP Agreement (Clause 8.5 and Appendix "B") details an audit framework for the program which specifies, in part, that audits are to be conducted to: assess the overall management and administration of the program; to determine whether funds were expended for the intended purpose; to evaluate project compliance with applicable legislation with particular emphasis on environmental legislation; and, to ensure appropriate information and monitoring systems are in place for program audit and evaluation purposes.

In addition, Appendix B requires that the Management Committee sets aside resources to develop and implement an annual audit plan that conforms to program guidelines. Consistent with this requirement, WD, in November 2002, developed a draft comprehensive annual audit plan.

Recommendation

The annual audit plan should be finalized and submitted to Management Committee for approval as soon as possible.

Audits and site visits should be coordinated between the federal and provincial governments to minimize the intrusion to recipients.

4.K.3
Several CBCIP documents contain confusing terminology and dates.

The CBCIP Agreement, the contracts with recipients, the Project Amendment Form, the Management Committee Briefing Binder, and SIMSI contain several dates which may lead to confusion. Not all parties involved with the program are using the dates consistently or in accordance with the specific definition. Further, not all of the terms are being used or understood in a consistent fashion by all parties involved in the Program.

The major misunderstanding appears to be between "commencement date" and "start date". The start date is the date on which Management Committee approved the project and is the date after which eligible costs can be claimed by the recipient. Commencement date, however, is the date on which the recipient plans to begin work on the project. It was included in the contracts as a mechanism for ensuring sure that the recipients started the projects on a timely basis. The most important distinction between the two dates is that the start date cannot be altered whereas the commencement date could be changed by the recipient with the approval of the Joint Secretariat. We found that start date and commencement date were being used interchangeably by both recipients and program officers often leading to confusion.

For example, MCAWS has been completing the Project Amendment Form to request a change to "Start Date" when, in fact, this should be a request for a change to the "commencement date" of the project.

Recommendation

For clarity, "Start Date" should be defined in "Definitions" section of the contract with the recipient.

CBCIP management and staff should ensure that specific terminology with a specific definition is used correctly to avoid confusion or possible future disagreements about the eligibility of claimed costs.

4.K.4
MCAWS does not have any processes in place to follow up on the return of signed contracts.

MCAWS sends contracts to recipients for signature but there is no deadline date for signing the contract provided in the covering letter and no process in place for follow up to ensure that the document is returned on a timely basis. In February 2003, we found that there were 13 unsigned contracts for Green projects that had been outstanding since July to September 2002 (six to eight months).

When MCAWS staff contacted the 13 recipients they found that, in some cases, there were disagreements with certain terms of the contracts and that the recipient planned on requesting changes. This is a problem in that the recipient disagrees with the contract terms, is not contacting MCAWS, but is still proceeding with the project implementation based on the approval from Management Committee.

Analysis of all 103 approved projects indicating the following:

Time for Contract to be Returned to MCAWS/MCSE	No. of Projects
Not yet sent	19
Sent 6 to 8 months before February 17, 2003 but not yet returned	13
Sent less than 30 days before February 17, 2003 but not yet returned	6
Returned within 30 days or less	41
Returned between 31 and 131 days	16
Returned between 132 and 203 days	8
Total Approved Projects	103

Recommendation

The covering letter sent with the contract should contain a date by which the document must be signed and returned to the provincial Ministry, otherwise the contract expires.

MCAWS (and MCSE) should implement a formal follow-up procedure to ensure that signed contracts are returned on a timely basis in order that problems are identified and resolved as soon as possible.

4.K.5
Project descriptions are insufficient for monitoring and audit purposes.

Appendix 1 to the contract with the recipient contains the description of the project being funded by the CBCIP. During the review of the project files, CAC noted that there were minimal project descriptions in the contracts. This is a significant concern especially for major projects and for projects that were scoped down from the original application.

CAC was advised by MCAWS that the province made a conscious decision to use minimal project descriptions. The Province wanted to use an outcome-based description to give the recipient latitude in reaching that outcome. The B.C. ministries included some outputs in the description to satisfy federal requirements.

We noted that there are, in some cases, vast differences between the project description on the original application and the approved project. In some cases a number of revisions may have taken place, some of which are not fully documented on the provincial project file. This is particularly the case for discussions and meetings held between the applicants and the MCAWS engineers.

In addition, it is not evident that the recipient and the province are both aware of all revisions that have been agreed to between the original application and the final signed contract. The minimal project descriptions are also a concern for claiming of costs. It may be very difficult to determine eligible project costs and audit a project if there is not a clear understanding of the limitations of the project, the project deliverables and milestone dates.

During our prepayment site reviews the minimal project description in the draft contract was an issue for the Green project with the GVWD. (Seymour Filtration Plant Project - total eligible cost $150 million). It was obvious during the site visit that the applicant and MCAWS were not clear on exactly what was being funded under the CBCIP and when the project had to be completed.

Recommendation

Significant scope changes and revisions to the original application should be clearly documented on the project file. There should also be a certification on file signed by the applicant in which they agree to the changes and revisions.

MCAWS and MCSE should use more detailed project descriptions in their contracts in order to provide a framework for future monitoring and audit of projects.

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